Disability Income Rent Test (ceased 2022)

The Disability Income Rent Test was removed 1 January 2022 and no longer affects the rate of rent assistance from that date. 

The information below is for historical reference only.

What was the disability income rent test?

When calculating the amount of rent assistance (RA) payable to a service pension, income support supplement or veteran payment recipient, any disability income received by that person or their partner, was counted as income and may have reduced the rate of RA payable to the person. The method of calculating the amount by which RA was reduced due to disability income was known as the disability income rent test. The amount calculated was the RA reduction amount.

Rent assistance free area

The disability income rent test incorporated a rent assistance free area. The RA free area was the amount of disability income an income support pensioner could receive before their rate of rent assistance was reduced by the disability income rent test. The RA free area applicable to a person was identical to the income free area the person received as an income support pensioner and was determined by their family situation. If a person's disability income did not exceed the applicable RA free area, there was no reduction to the rate of RA under the disability income rent test.    

Application of the disability income rent test

If the amount of disability income a person received exceeded the applicable rent assistance free area, a RA reduction amount was calculated by applying the disability income rent test. The calculation formula was as follows:

The taper rate in the above formula was identical to the taper rate that applied to the person's income support payment. This meant that rent assistance was reduced by 50 cents for each dollar of disability income in excess of the RA free area for a person assessed under the standard rules, and reduced by 40 cents per dollar for a person assessed under the transitional rules.

Example of the disability income rent test for a single assessment

A single pensioner was paying $250.00 per fortnight in rent as at 25 September 2009. The fortnightly rate of rent assistance (using the thresholds current as at 25 September 2009) was calculated as follows:

$250.00 (rent) – $99.40 (threshold) x 0.75 = $112.95    

If the same pensioner was in receipt of 100% Disability Compensation Payment (formerly disability pension), the disability income rent test applied. This is because the amount of disability income, $363.10 per fortnight (100% DCP as at 20 September 2009), exceeded the RA free area for a single pensioner of $142.00 per fortnight. As a result, the rate of rent assistance of $112.95 per fortnight (calculated above) was reduced by 50 cents in the dollar for each dollar of disability income that exceeded $142.00. This equalled:

($363.10 (disability income) – $142.00 (RA free area)) x 0.50 = $110.50 (RA reduction amount)

The rate of rent assistance payable was therefore:

$112.95 – $110.50 (RA reduction amount) = $2.45 per fortnight

Example of the disability income rent test for a single transitional assessment

If the above pensioner was in receipt of 100% Disability Compensation Payment (formerly disability pension) and was a single service pensioner assessed under the transitional rules, the 40 cent taper applied in the disability income rent test.

That is:

($363.10 (disability income) – $142.00 (RA free area)) x 0.40 = $88.44 (RA reduction amount)

The rate of rent assistance payable was therefore:

$112.95 – $88.44 (RA reduction amount) = $24.51 per fortnight

Example of the disability income rent test for a partnered assessment

A couple was paying a total of $250.00 per fortnight in rent as at 25 September 2009. The fortnightly rate of rent assistance for each member of the couple (using the thresholds current as at 25 September 2009) was calculated as follows:

$250.00 (total rent) – $162.00 (combined threshold) x 0.375 = $33.00 each (rounded)    

If the same couple was in receipt of disability income consisting of the veteran's 100% Disability Compensation Payment (formerly disability pension), the disability income rent test applied. This is because the amount of disability income, $363.10 per fortnight (100% DCP as at 20 September 2009), exceeded the combined RA free area for a couple of $248.00 per fortnight. As a result, the couple's combined rent assistance was reduced by 50 cents in the dollar for each dollar that exceeded $248.00. For the purposes of the disability income rent test formula, this was a reduction of 25 cents in the dollar for each member of the couple. This equalled:

$363.10 (disability income) – $248.00 (RA free area) x 0.25 = $28.78 each (RA reduction amount)

The rate of rent assistance payable to each member of the couple was therefore:

$33.00 – $28.78 (RA reduction amount) = $4.22 each per fortnight

Disability income rent test not applied if hardship pension payable

As disability income is assessable under the financial hardship provisions, it was not considered to be income again for rent assistance purposes. Therefore, if a pension was payable to a person under the financial hardship provisions and rent assistance was also payable to that person, the disability income rent test was not applied.    

Treatment of disability income if compensation or damages payable

If a person receiving a Disability Compensation Payment (formerly disability pension) also receives compensation or damages payments, their rate of Disability Compensation Payment may be reduced. In these cases, it is the reduced rate of Disability Compensation Payment that is used in calculating the person's rate of RA, not the rate prior to reduction.    

Blinded pensioners

The disability income rent test also applied to blinded service pensioners, income support supplement and veteran payment recipients if their income support payment included a rent assistance component.